Drowning in Debt: Making Healthy Decisions to Manage Money

Lesson Content

• Lesson Plan Template:

  CTE Lesson Plan

• CTE Course Info and Benchmark Notes

  
  

  Personal Financial Literacy 8500120

  Career Cluster: Finance

  CIP Number: 09200104PA

  Course Type: Non Career Preparatory

• Unit Outline

  
  

  This lesson is designed to be used with the case study, Drowning in Debt: Making Healthy Decisions to Manage Money. See CPALMS resource ID# 207941.

• Career Connection

  
  

  This lesson addresses the career building skills of critical thinking and taking personal responsibility for financial decisions. Students will evaluate how an annual salary breaks down into a monthly budget, which is an important factor when considering a career choice. Students will research resources for lowering expenses, which could involve verbal or written communication with individuals in the banking industry or other institutions.

• Learning Objectives

  
  

  Students will be able to:

  • Analyze a monthly budget listing income and expenses.
  • Identify areas of the budget that could be eliminated or modified to improve financial stability.
  • Discuss strategies for addressing the necessary changes needed.
  • Identify resources available to assist consumers with credit counseling and debt management.

• Prior Knowledge

  
  

  Students should be familiar with:

  • The concept of a monthly budget including income and expenses.
  • Etiquette for composing professional emails.
  • Collaborating with a partner.

• Guiding Questions

  
  
  • How can a person manage their monthly expenses?
  • What are available options for dealing with debt?

• Procedure

  
  

  1. To introduce the lesson, refer to the case study, Drowning in Debt: Making Healthy Decisions to Manage Money, (See CPALMS Resource ID #207941).

  • Consider providing students with a copy of the case study so that they can take notes, highlight key details, and modify the budget spreadsheet.

  2. After students read through the case study, ask the following discussion questions.

  • What are the largest monthly expenses in Josh’s budget?
  • Are all of Josh's expenses necessary? Why or why not?
  • What will his new monthly expenses total be now that his roommate has moved out?
  • What can he do to improve his situation? (Ex: find a new roommate, trade his car in for a less expensive model, etc.)

  3. Provide students with the Budget Analysis handout (see attachments). Ensure that students have a copy of Josh’s Monthly Budget provided with the case study.

  • Read the instructions at the top of the Budget Analysis handout. Explain that making financial decisions requires considering different options, steps for implementation, and issues that may arise.
  • Guide students through the first expense listed on the worksheet (Rent) and briefly discuss possible ideas for actions, plans, and issues. See the Teacher Notes for potential suggestions.

  4. With a partner, students should evaluate each budget item to determine how Josh could lower his monthly expenses.

  • Students will record an action for each expense. If they choose to decrease or eliminate an expense, they should write a brief description for a plan and possible issues that could affect the plan.
  • Students may consult web resources to support their answers.

  5. To bring the lesson to a close, students will share their proposed solutions with the class. If time allows, pose the following questions to the class.

  • When a person is “drowning in debt,” how can they ask for help? (Contact their bank, research debt assistance organizations, talk to their close family/friends)
  • What could happen if Josh does not take immediate steps to improve his financial situation? (Repossession of car, eviction, collection agency, etc.)

• Teacher Notes

  
  
  • For the lesson, students should work with a partner to discuss ideas and solutions. Each student should record their answers on a worksheet.
  • For step 3, the teacher can suggest the following actions to help students generate ideas.
  • • Josh could find a new roommate to decrease his rent back to $900/month. How would he search for a roommate? How would he add this person to the lease agreement?
    • Josh could look for a more affordable place to live such as moving in with his parents, finding a smaller apartment, etc. What will happen if he breaks his lease agreement? Would his parents have room for his furnishings?

• Optional

  
  

  Extension Ideas:

  • Assuming the role of Josh, students can compose an email to the bank that processed the car loan to request assistance. The email should be properly and professionally formatted and checked for spelling/grammar. Students should include a statement of the problem and a request for assistance such as refinancing or lowering payments, etc.
  • Students can research how to calculate loan payments on less expensive cars using websites with free auto loan calculators.